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EMC Insurance Group Inc. Reports 2015 Third Quarter and Nine Month Results and Increases Quarterly Cash Dividend

Third Quarter Ended September 30, 2015

Operating Income Per Share – $0.31
Net Income Per Share – $0.54
Net Realized Investment Gains Per Share – $0.24
Catastrophe and Storm Losses Per Share – $0.56
Large Losses Per Share – $0.32
GAAP Combined Ratio – 101.8 percent

Nine Months Ended September 30, 2015

Operating Income Per Share – $1.59
Net Income Per Share – $1.96
Net Realized Investment Gains Per Share – $0.37
Catastrophe and Storm Losses Per Share – $1.29
Large Losses Per Share – $0.68
GAAP Combined Ratio – 97.0 percent

2015 Operating Income Guidance – $1.80 to $2.00 per share

DES MOINES, Iowa, Nov. 06, 2015 (GLOBE NEWSWIRE) -- EMC Insurance Group Inc. (NASDAQ:EMCI) today reported operating income of $6.3 million ($0.31 per share) for the third quarter ended September 30, 2015, compared to operating income of $2.5 million ($0.12 per share) for the third quarter of 20141. For the nine months ended September 30, 2015, the Company reported operating income of $32.8 million ($1.59 per share), compared to $11.7 million ($0.58 per share) for the same period in 2014.

Net income, including realized investment gains and losses, totaled $11.2 million ($0.54 per share) for the third quarter of 2015, compared to $2.2 million ($0.11 per share) for the third quarter of 2014. For the nine months ended September 30, 2015, the Company reported net income of $40.3 million ($1.96 per share), compared to $13.8 million ($0.69 per share) for the same period in 2014.

The Company’s GAAP combined ratio was 101.8 percent in the third quarter of 2015, compared to 107.1 percent in the third quarter of 2014. For the first nine months of 2015, the Company’s GAAP combined ratio was 97.0 percent, compared to 105.0 percent in 2014.

“Operating results for the third quarter improved in both segments, continuing the trend experienced in the first half of the year,” stated President and Chief Executive Officer Bruce G. Kelley. “Based on the good results achieved through the first nine months of the year, we now expect to achieve 2015 operating income near the high end of our guidance range.”

Based on results for the first nine months of 2015 and projections for the remainder of the year, management is reaffirming its 2015 operating income guidance in the previous range of $1.80 to $2.00 per share. This guidance is based on a projected GAAP combined ratio of 97.6 percent for the year and investment income consistent with the amount reported in 2014. The load for catastrophe and storm losses has been reduced to 8.6 points from the previous load of 9.5 points; however, the 0.9 point decline in the loss ratio attributable to this reduction was partially offset by an increase in other types of losses.

Kelley continued, “Catastrophe and storm losses are down for the year compared to our long-term average, and we expect the inter-company reinsurance programs announced earlier this week will help reduce the volatility we have historically experienced in our quarterly results due to catastrophe and storm losses.” These reinsurance programs will become effective January 1, 2016, subject to approval by regulatory authorities.

In addition, on November 4, 2015, the board of directors of the Company declared a quarterly cash dividend of $0.19 per share of common stock payable November 24, 2015 to stockholders of record as of November 17, 2015. The $0.19 per share quarterly dividend represents an 11.8 percent increase over the previous quarterly dividend of $0.17 per share, and when combined with the dividend increase implemented during the third quarter, represents a 14.0 percent increase over the previous split-adjusted dividend of $0.1667 per share.

Kelley went on to say, “This double-digit percentage increase of the dividend is a reflection of the good results achieved through the first nine months of the year, and our expectations for the fourth quarter. Our intent is to reward stockholders with an attractive return on their investment--and we have. The Company has paid a quarterly dividend since becoming publicly held in February 1982, and has never reduced its dividend. We remain confident in the strength of our balance sheet to support future dividend payments and continued profitable growth,” concluded Kelley.

In the third quarter, premiums earned increased 5.4 percent to $145.8 million, from $138.3 million in 2014. In the property and casualty insurance segment, premiums earned increased 5.4 percent, with the majority of the increase attributable to rate level increases on renewal business and growth in insured exposures and an increase in retained policies in the commercial lines of business.

In the reinsurance segment, premiums earned increased 5.5 percent, primarily due to growth in the Mutual Reinsurance Bureau underwriting association (MRB), which reported a significant increase in pro rata liability business. The increase in MRB premiums was partially offset by reduced participation in the offshore energy and liability proportional account for the 2015 contract year. It is important to note that a premium adjustment made in 2014 is inflating the percentage increase reported for the third quarter of 2015. This adjustment stemmed from a change in the premium recognition period of two large facility contracts in the pro rata property line of business that was implemented in the third quarter of 2014. For the first nine months of 2015, premiums earned increased 5.9 percent (6.6 percent in the property and casualty insurance segment and 3.5 percent in the reinsurance segment).

Catastrophe and storm losses totaled $17.8 million ($0.56 per share after tax) in the third quarter of 2015, compared to $17.5 million ($0.56 per share after tax) in the third quarter of 2014. Third quarter catastrophe and storm losses accounted for 12.2 percentage points of the combined ratio, which is below the Company’s most recent 10-year average of 14.2 percentage points for this period and consistent with the 12.6 percentage points experienced in the third quarter of 2014. For the first nine months of 2015, catastrophe and storm losses totaled $40.8 million ($1.29 per share after tax), compared to $52.8 million ($1.70 per share after tax) in 2014. On a segment basis, catastrophe and storm losses amounted to $9.9 million ($0.31 per share after tax) and $28.7 million ($0.91 per share after tax) in the property and casualty insurance segment, and $7.9 million ($0.25 per share after tax) and $12.1 million ($0.38 per share after tax) in the reinsurance segment, for the three months and nine months ended September 30, 2015, respectively.

The Company reported $2.2 million ($0.07 per share after tax) of favorable development on prior years’ reserves during the third quarter of 2015, compared to $1.7 million ($0.06 per share after tax) in the third quarter of 2014. For the first nine months of 2015, favorable development totaled $20.0 million ($0.63 per share after tax), compared to $10.9 million ($0.35 per share after tax) in 2014. Development amounts can vary significantly from quarter to quarter and year to year depending on a number of factors, including the number of claims settled and the settlement terms, and should therefore not be considered a reliable factor in assessing the adequacy of the Company’s carried reserves. The most recent actuarial analysis of the Company’s carried reserves indicates that carried reserves remain within the top quartile of the range of reasonable reserves.

Large losses (which the Company defines as losses greater than $500,000 for the EMC Insurance Companies pool, excluding catastrophe and storm losses) increased slightly to $10.3 million ($0.32 per share after tax) in the third quarter of 2015 from $9.7 million ($0.31 per share after tax) in the third quarter of 2014. For the first nine months of 2015, large losses decreased to $21.5 million ($0.68 per share after tax) from $23.8 million ($0.77 per share after tax) in 2014.

Net investment income declined 1.8 percent and 1.4 percent to $11.3 million and $33.9 million for the three and nine months ended September 30, 2015 from $11.5 million and $34.4 million for the same periods in 2014. Net investment income for the first nine months of 2014 included approximately $442,000 that resulted from the early payoff of a commercial mortgage-backed security during the first quarter of 2014 that was purchased at a significant discount to par value, which accelerated the accretion of the discount to par value and therefore increased investment income. Excluding this amount, net investment income would have been relatively flat for the first nine months of 2015 compared to the same period in 2014.

Net realized investment gains totaled $7.5 million ($0.24 per share after tax) and $11.6 million ($0.37 per share after tax) for the third quarter and first nine months of 2015, compared to net realized investment losses of $390,000 ($0.01 per share after tax) and net realized investment gains of $3.2 million ($0.10 per share after tax) for the same periods in 2014. Included in net realized investment gains reported for the third quarter and first nine months of 2015 are $7.2 million and $3.8 million, respectively, of realized investment gains attributed to increases in the carrying value of a limited partnership that helps protect the Company from a sudden and significant decline in the value of its equity portfolio (the equity tail-risk hedging strategy). Included in the net realized investment gains/losses reported for the third quarter and first nine months of 2014 are $917,000 and $2.1 million, respectively, of net realized investment losses attributed to the decline in carrying value of this limited partnership.

At September 30, 2015, consolidated assets totaled $1.6 billion, including $1.4 billion in the investment portfolio, and stockholders’ equity totaled $519.9 million, an increase of 3.4 percent from December 31, 2014. Book value of the Company’s stock increased 1.5 percent to $25.09 per share from $24.72 per share at December 31, 2014. Book value excluding accumulated other comprehensive income increased to $22.16 per share from $20.70 per share at December 31, 2014.

The Company will hold an earnings teleconference call at noon Eastern time on November 6, 2015 to allow securities analysts, stockholders and other interested parties the opportunity to hear management discuss the Company’s results for the quarter and nine months ended September 30, 2015, as well as its expectations for the remainder of 2015. Dial-in information for the call is toll-free 1-877-407-9205 (International: 1-201-689-8054).

Members of the news media, investors and the general public are invited to access a live webcast of the conference call via the Company’s investor relations page at www.emcins.com/ir. The webcast will be archived and available for replay until February 6, 2015. A transcript of the teleconference will also be available on the Company’s website shortly after the completion of the teleconference.

About EMCI:

EMC Insurance Group Inc. is a publicly held insurance holding company with operations in property and casualty insurance and reinsurance, which was formed in 1974 and became publicly held in 1982. The Company’s common stock trades on the Global Select Market tier of the NASDAQ OMX Stock Market under the symbol EMCI. Additional information regarding EMC Insurance Group Inc. may be found at www.emcins.com/ir. EMCI’s parent company is Employers Mutual Casualty Company (EMCC). EMCI and EMCC, together with their subsidiary and affiliated companies, conduct operations under the trade name EMC Insurance Companies.

Cautionary Note Regarding Forward-Looking Statements:

The Private Securities Litigation Reform Act of 1995 provides issuers the opportunity to make cautionary statements regarding forward-looking statements. Accordingly, any forward-looking statement contained in this report is based on management’s current beliefs, assumptions and expectations of the Company’s future performance, taking into account all information currently available to management. These beliefs, assumptions and expectations can change as the result of many possible events or factors, not all of which are known to management. If a change occurs, the Company’s business, financial condition, liquidity, results of operations, plans and objectives may vary materially from those expressed in the forward-looking statements.

The risks and uncertainties that may affect the actual results of the Company include, but are not limited to, the following:

  • catastrophic events and the occurrence of significant severe weather conditions;
  • the adequacy of loss and settlement expense reserves;
  • state and federal legislation and regulations;
  • changes in the property and casualty insurance industry, interest rates or the performance of financial markets and the general economy;
  • rating agency actions;
  • “other-than-temporary” investment impairment losses; and
  • other risks and uncertainties inherent to the Company’s business, including those discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K.

Management intends to identify forward-looking statements when using the words “believe,” “expect,” “anticipate,” “estimate,” “project,” or similar expressions. Undue reliance should not be placed on these forward-looking statements. The Company disclaims any obligation to update such statements or to announce publicly the results of any revisions that it may make to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

¹The Company prepares its public financial statements in conformity with accounting principles generally accepted in the Unites States of America (GAAP). Operating income is a non-GAAP financial measure, calculated by excluding net realized investment gains/losses from net income. The Company’s calculation of operating income may differ from similar measures used by other companies, so investors should exercise caution when comparing the Company’s measure of operating income to the measure of other companies. Management’s projected operating income guidance is also considered a non-GAAP financial measure.

Management believes operating income is useful to investors because it illustrates the performance of our normal, ongoing operations, which is important in understanding and evaluating our financial condition and results of operations. While this measure is consistent with measures utilized by investors to evaluate performance, it is not a substitute for the GAAP financial measure of net income. Therefore, the Company has provided the following reconciliation of the non-GAAP financial measure of operating income to the GAAP financial measure of net income. Management also uses non-GAAP financial measures for goal setting, determining employee and senior management awards and compensation, and evaluating performance.

The reconciliation of operating income to net income is as follows:

Three Months Ended
September 30,
Nine Months Ended
September 30,
2015 2014 2015 2014
($ in thousands)
Operating income$ 6,315 $ 2,482 $ 32,756 $ 11,748
Net realized investment gains (losses) 4,874 (253) 7,511 2,090
Net income $ 11,189 $ 2,229 $ 40,267 $ 13,838


CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
($ in thousands, except share and per share amounts)
Property and
Casualty Parent
Quarter Ended September 30, 2015 Insurance Reinsurance Company Consolidated
Revenues:
Premiums earned $ 113,753 $ 32,035 $ - $ 145,788
Investment income, net 8,125 3,176 (2) 11,299
Other income 210 309 - 519
122,088 35,520 (2) 157,606
Losses and expenses:
Losses and settlement expenses 75,976 26,709 - 102,685
Dividends to policyholders 3,555 - - 3,555
Amortization of deferred policy acquisition costs 18,736 7,403 - 26,139
Other underwriting expenses 15,587 458 - 16,045
Interest expense 84 - - 84
Other expenses 196 - 479 675
114,134 34,570 479 149,183
Operating income (loss) before income taxes 7,954 950 (481) 8,423
Realized investment gains 4,889 2,609 - 7,498
Income (loss) before income taxes 12,843 3,559 (481) 15,921
Income tax expense (benefit):
Current 2,743 507 (169) 3,081
Deferred 1,235 416 - 1,651
3,978 923 (169) 4,732
Net Income (loss) $ 8,865 $ 2,636 $ (312) $ 11,189
Average shares outstanding 20,684,890
Per Share Data:
Net income (loss) per share - basic and diluted $ 0.43 $ 0.12 $ (0.01) $ 0.54
Catastrophe and storm losses (after tax) $ 0.31 $ 0.25 $ - $ 0.56
Large losses* (after tax) $ 0.32 $ - $ - $ 0.32
Reported (adverse) favorable development
experienced on prior years' reserves (after tax) $ 0.15 $ (0.08) $ - $ 0.07
Dividends per share $ 0.170
Other Information of Interest:
Net written premiums $ 134,722 $ 31,446 $ - $ 166,168
Catastrophe and storm losses $ 9,920 $ 7,844 $ - $ 17,764
Large losses* $ 10,304 $ - $ - $ 10,304
Reported adverse (favorable) development
experienced on prior years' reserves $ (4,722) $ 2,495 $ - $ (2,227)
GAAP Ratios:
Loss and settlement expense ratio 66.8% 83.4% - 70.4%
Acquisition expense ratio 33.3% 24.5% - 31.4%
Combined ratio 100.1% 107.9% - 101.8%
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
($ in thousands, except share and per share amounts)
Property and
Casualty Parent
Quarter Ended September 30, 2014 Insurance Reinsurance Company Consolidated
Revenues:
Premiums earned $ 107,952 $ 30,364 $ - $ 138,316
Investment income, net 8,230 3,275 (2) 11,503
Other income 202 1,028 - 1,230
116,384 34,667 (2) 151,049
Losses and expenses:
Losses and settlement expenses 78,556 28,096 - 106,652
Dividends to policyholders 2,588 - - 2,588
Amortization of deferred policy acquisition costs 18,143 6,814 - 24,957
Other underwriting expenses 13,079 828 - 13,907
Interest expense 84 - - 84
Other expenses 132 - 456 588
112,582 35,738 456 148,776
Operating income (loss) before income taxes 3,802 (1,071) (458) 2,273
Realized investment losses (286) (104) - (390)
Income (loss) before income taxes 3,516 (1,175) (458) 1,883
Income tax expense (benefit):
Current (304) (988) (160) (1,452)
Deferred 759 347 - 1,106
455 (641) (160) (346)
Net Income (loss) $ 3,061 $ (534) $ (298) $ 2,229
Average shares outstanding 20,267,538
Per Share Data:
Net income (loss) per share - basic and diluted $ 0.15 $ (0.03) $ (0.01) $ 0.11
Catastrophe and storm losses (after tax) $ 0.32 $ 0.24 $ - $ 0.56
Large losses* (after tax) $ 0.31 $ - $ - $ 0.31
Reported favorable development
experienced on prior years' reserves (after tax) $ 0.02 $ 0.04 $ - $ 0.06
Dividends per share $ 0.153
Other Information of Interest:
Net written premiums $ 131,005 $ 31,824 $ - $ 162,829
Catastrophe and storm losses $ 10,064 $ 7,415 $ - $ 17,479
Large losses* $ 9,673 $ - $ - $ 9,673
Reported favorable development
experienced on prior years' reserves $ (427) $ (1,264) $ - $ (1,691)
GAAP Ratios:
Loss and settlement expense ratio 72.8% 92.5% - 77.1%
Acquisition expense ratio 31.3% 25.2% - 30.0%
Combined ratio 104.1% 117.7% - 107.1%
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
($ in thousands, except share and per share amounts)
Property and
Casualty Parent
Nine Months Ended September 30, 2015 Insurance Reinsurance Company Consolidated
Revenues:
Premiums earned $ 333,212 $ 95,912 $ - $ 429,124
Investment income, net 24,301 9,654 (9) 33,946
Other income 582 1,040 - 1,622
358,095 106,606 (9) 464,692
Losses and expenses:
Losses and settlement expenses 215,468 65,135 - 280,603
Dividends to policyholders 6,492 - - 6,492
Amortization of deferred policy acquisition costs 56,003 22,820 - 78,823
Other underwriting expenses 47,784 2,567 - 50,351
Interest expense 253 - - 253
Other expenses 568 - 1,424 1,992
326,568 90,522 1,424 418,514
Operating income (loss) before income taxes 31,527 16,084 (1,433) 46,178
Realized investment gains 7,866 3,689 - 11,555
Income (loss) before income taxes 39,393 19,773 (1,433) 57,733
Income tax expense (benefit):
Current 10,513 5,583 (502) 15,594
Deferred 1,312 560 - 1,872
11,825 6,143 (502) 17,466
Net income (loss) $ 27,568 $ 13,630 $ (931) $ 40,267
Average shares outstanding 20,577,493
Per Share Data:
Net income (loss) per share - basic and diluted $ 1.34 $ 0.66 $ (0.04) $ 1.96
Catastrophe and storm losses (after tax) $ 0.91 $ 0.38 $ - $ 1.29
Large losses* (after tax) $ 0.68 $ - $ - $ 0.68
Reported favorable development experienced on
prior years' reserves (after tax) $ 0.45 $ 0.18 $ - $ 0.63
Dividends per share $ 0.503
Book value per share $ 25.09
Effective tax rate 30.3%
Annualized net income as a percent of beg. SH equity 10.7%
Other Information of Interest:
Net written premiums $ 364,329 $ 96,914 $ - $ 461,243
Catastrophe and storm losses $ 28,651 $ 12,104 $ - $ 40,755
Large losses* $ 21,453 $ - $ - $ 21,453
Reported favorable development experienced on
prior years' reserves $ (14,177) $ (5,780) $ - $ (19,957)
GAAP Ratios:
Loss and settlement expense ratio 64.7% 67.9% - 65.4%
Acquisition expense ratio 33.1% 26.5% - 31.6%
Combined ratio 97.8% 94.4% - 97.0%
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
($ in thousands, except share and per share amounts)
Property and
Casualty Parent
Nine Months Ended September 30, 2014 Insurance Reinsurance Company Consolidated
Revenues:
Premiums earned $ 312,716 $ 92,632 $ - $ 405,348
Investment income, net 24,818 9,624 (8) 34,434
Other income 584 1,042 - 1,626
338,118 103,298 (8) 441,408
Losses and expenses:
Losses and settlement expenses 227,069 74,398 - 301,467
Dividends to policyholders 6,517 - - 6,517
Amortization of deferred policy acquisition costs 53,895 20,795 - 74,690
Other underwriting expenses 41,103 1,838 - 42,941
Interest expense 253 - - 253
Other expenses 540 - 1,173 1,713
329,377 97,031 1,173 427,581
Operating income (loss) before income taxes 8,741 6,267 (1,181) 13,827
Realized investment gains 2,293 922 - 3,215
Income (loss) before income taxes 11,034 7,189 (1,181) 17,042
Income tax expense (benefit):
Current 1,546 1,716 (414) 2,848
Deferred 315 41 - 356
1,861 1,757 (414) 3,204
Net Income (loss) $ 9,173 $ 5,432 $ (767) $ 13,838
Average shares outstanding 20,165,697
Per Share Data:
Net income (loss) per share - basic and diluted $ 0.46 $ 0.27 $ (0.04) $ 0.69
Catastrophe and storm losses (after tax) $ 1.24 $ 0.46 $ - $ 1.70
Large losses* (after tax) $ 0.77 $ - $ - $ 0.77
Reported favorable development
experienced on prior years' reserves (after tax) $ 0.20 $ 0.15 $ - $ 0.35
Dividends per share $ 0.460
Book value per share $ 23.93
Effective tax rate 18.8%
Annualized net income as a percent of beg. SH equity 3.9%
Other Information of Interest:
Net written premiums $ 345,982 $ 91,276 $ - $ 437,258
Catastrophe and storm losses $ 38,501 $ 14,335 $ - $ 52,836
Large losses* $ 23,782 $ - $ - $ 23,782
Reported favorable development
experienced on prior years' reserves $ (6,106) $ (4,816) $ - $ (10,922)
GAAP Ratios:
Loss and settlement expense ratio 72.6% 80.3% - 74.4%
Acquisition expense ratio 32.5% 24.4% - 30.6%
Combined ratio 105.1% 104.7% - 105.0%
*Large losses are defined as losses greater than $500 for the EMC Insurance Companies pool, excluding catastrophe and storm losses.

CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2015 2014
($ in thousands, except share and per share amounts)(Unaudited)
ASSETS
Investments:
Fixed maturity securities available-for-sale, at fair value
(amortized cost $1,139,373 and $1,080,006)$ 1,177,961 $ 1,127,499
Equity securities available-for-sale, at fair value
(cost $142,941 and $123,972) 194,305 197,036
Other long-term investments 15,396 6,227
Short-term investments 32,798 53,262
Total investments 1,420,460 1,384,024
Cash 570 383
Reinsurance receivables due from affiliate 25,399 28,603
Prepaid reinsurance premiums due from affiliate 7,638 8,865
Deferred policy acquisition costs (affiliated $44,559 and $38,930) 44,710 39,343
Prepaid pension and postretirement benefits due from affiliate 18,162 17,360
Accrued investment income 11,716 10,295
Amounts receivable under reverse repurchase agreements 16,850 -
Accounts receivable 1,402 1,767
Income taxes recoverable 2,657 -
Goodwill 942 942
Other assets (affiliated $4,611 and $4,900) 5,019 6,238
Total assets$ 1,555,525 $ 1,497,820
LIABILITIES
Losses and settlement expenses (affiliated $675,247 and $650,652)$ 683,930 $ 661,309
Unearned premiums (affiliated $263,096 and $230,460) 263,686 232,093
Other policyholders' funds (all affiliated) 8,593 10,153
Surplus notes payable to affiliate 25,000 25,000
Amounts due affiliate to settle inter-company transaction balances 7,347 8,559
Pension benefits payable to affiliate 4,082 4,162
Income taxes payable - 3
Deferred income taxes 19,295 28,654
Other liabilities (affiliated $23,547 and $23,941) 23,659 25,001
Total liabilities 1,035,592 994,934
STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized 30,000,000
shares; issued and outstanding, 20,720,855
shares in 2015 and 20,344,409 shares in 2014 20,721 20,344
Additional paid-in capital 107,426 99,891
Accumulated other comprehensive income 60,804 81,662
Retained earnings 330,982 300,989
Total stockholders' equity 519,933 502,886
Total liabilities and stockholders' equity$ 1,555,525 $ 1,497,820

LOSS AND SETTLEMENT EXPENSE BY LINE OF BUSINESS
Three months ended September 30,
2015 2014
($ in thousands) Premiums
earned
Losses and
settlement
expenses
Loss and
settlement
expense ratio
Premiums
earned
Losses and
settlement
expenses
Loss and
settlement
expense ratio
Property and casualty insurance
Commercial lines:
Automobile $ 27,080 $ 24,555 90.7% $ 25,000 $ 21,974 87.9%
Property 26,526 19,290 72.7% 25,111 18,191 72.4%
Workers' compensation 23,777 12,098 50.9% 22,209 11,582 52.2%
Liability 23,449 10,726 45.7% 22,090 18,450 83.5%
Other 2,032 348 17.1% 1,881 220 11.7%
Total commercial lines 102,864 67,017 65.2% 96,291 70,417 73.1%
Personal lines:
Automobile 5,717 4,717 82.5% 6,284 4,287 68.2%
Homeowners 5,172 4,242 82.0% 5,377 3,852 71.6%
Total personal lines 10,889 8,959 82.3% 11,661 8,139 69.8%
Total property and casualty
insurance $ 113,753 $ 75,976 66.8% $ 107,952 $ 78,556 72.8%
Reinsurance
Pro rata reinsurance:
Multiline (primarily property) $ 1,190 $ 747 62.8% $ 700 $ 957 136.8%
Property 4,162 3,894 93.6% 2,622 3,838 146.4%
Liability 4,787 3,137 65.6% 3,148 1,289 40.9%
Marine 2,898 1,889 65.2% 3,502 3,576 102.1%
Total pro rata reinsurance 13,037 9,667 74.2% 9,972 9,660 96.9%
Excess of loss reinsurance:
Property 16,249 13,524 83.2% 17,248 16,108 93.4%
Liability 2,749 3,518 128.0% 3,144 2,328 74.1%
Total excess of loss reinsurance 18,998 17,042 89.7% 20,392 18,436 90.0%
Total reinsurance $ 32,035 $ 26,709 83.4% $ 30,364 $ 28,096 92.5%
Consolidated $ 145,788 $ 102,685 70.4% $ 138,316 $ 106,652 77.1%

LOSS AND SETTLEMENT EXPENSE BY LINE OF BUSINESS
Nine months ended September 30,
2015 2014
($ in thousands) Premiums
earned
Losses and
settlement
expenses
Loss and
settlement
expense ratio
Premiums
earned
Losses and
settlement
expenses
Loss and
settlement
expense ratio
Property and casualty insurance
Commercial lines:
Automobile $ 78,698 $ 61,843 78.6% $ 71,657 $ 56,864 79.4%
Property 77,518 53,652 69.2% 71,756 57,891 80.7%
Workers' compensation 69,150 39,591 57.3% 65,172 38,131 58.5%
Liability 68,952 34,668 50.3% 63,600 42,957 67.5%
Other 6,044 794 13.1% 5,472 705 12.9%
Total commercial lines 300,362 190,548 63.4% 277,657 196,548 70.8%
Personal lines:
Automobile 17,313 12,013 69.4% 18,999 14,473 76.2%
Homeowners 15,537 12,907 83.1% 16,060 16,048 99.9%
Total personal lines 32,850 24,920 75.9% 35,059 30,521 87.1%
Total property and casualty
insurance $ 333,212 $ 215,468 64.7% $ 312,716 $ 227,069 72.6%
Reinsurance
Pro rata reinsurance:
Multiline (primarily property) $ 4,584 $ 1,180 25.7% $ 5,031 $ 3,570 71.0%
Property 11,877 13,151 110.7% 9,929 10,112 101.8%
Liability 13,955 8,701 62.4% 8,661 4,983 57.5%
Marine 9,738 436 4.5% 11,721 6,700 57.2%
Total pro rata reinsurance 40,154 23,468 58.4% 35,342 25,365 71.8%
Excess of loss reinsurance:
Property 46,425 32,041 69.0% 48,507 47,240 97.4%
Liability 9,333 9,626 103.1% 8,783 1,793 20.4%
Total excess of loss reinsurance 55,758 41,667 74.7% 57,290 49,033 85.6%
Total reinsurance $ 95,912 $ 65,135 67.9% $ 92,632 $ 74,398 80.3%
Consolidated $ 429,124 $ 280,603 65.4% $ 405,348 $ 301,467 74.4%

NET WRITTEN PREMIUMS
Three months ended Three months ended
September 30, 2015 September 30, 2014
Percent of Percent of Change in
Written net written Written net written net written
($ in thousands)premiums premiums premiums premiums premiums
Property and casualty insurance
Commercial lines:
Automobile$ 28,904 17.4% $ 27,792 17.1% 4.0%
Property 32,891 19.8% 31,735 19.5% 3.6%
Workers' compensation 33,385 20.1% 32,236 19.8% 3.6%
Liability 26,556 16.0% 25,072 15.4% 5.9%
Other 2,213 1.3% 2,352 1.4% (5.9)%
Total commercial lines 123,949 74.6% 119,187 73.2% 4.0%
Personal lines:
Automobile 5,333 3.2% 5,962 3.7% (10.5)%
Homeowners 5,440 3.3% 5,856 3.6% (7.1)%
Total personal lines 10,773 6.5% 11,818 7.3% (8.8)%
Total property and
casualty insurance$ 134,722 81.1% $ 131,005 80.5% 2.8%
Reinsurance
Pro rata reinsurance:
Multiline (primarily property)$ 930 0.6% $ 1,228 0.8% (24.3)%
Property 4,678 2.8% 2,172 1.3% 115.4%
Liability 5,925 3.6% 3,351 2.1% 76.8%
Marine 570 0.3% 3,980 2.4% (85.7)%
Total pro rata reinsurance 12,103 7.3% 10,731 6.6% 12.8%
Excess of loss reinsurance:
Property 16,614 10.0% 17,929 11.0% (7.3)%
Liability 2,729 1.6% 3,164 1.9% (13.7)%
Total excess of loss reinsurance 19,343 11.6% 21,093 12.9% (8.3)%
Total reinsurance$ 31,446 18.9% $ 31,824 19.5% (1.2)%
Consolidated$ 166,168 100.0% $ 162,829 100.0% 2.1%
NET WRITTEN PREMIUMS
Nine months ended Nine months ended
September 30, 2015 September 30, 2014
Percent of Percent of Change in
Written net written Written net written net written
($ in thousands)premiums premiums premiums premiums premiums
Property and casualty insurance
Commercial lines:
Automobile$ 86,947 18.9% $ 80,335 18.4% 8.2%
Property 85,853 18.6% 80,992 18.5% 6.0%
Workers' compensation 76,912 16.7% 73,703 16.9% 4.4%
Liability 75,765 16.4% 70,366 16.1% 7.7%
Other 6,413 1.4% 5,907 1.3% 8.6%
Total commercial lines 331,890 72.0% 311,303 71.2% 6.6%
Personal lines:
Automobile 16,944 3.7% 18,583 4.2% (8.8)%
Homeowners 15,495 3.3% 16,096 3.7% (3.7)%
Total personal lines 32,439 7.0% 34,679 7.9% (6.5)%
Total property and
casualty insurance$ 364,329 79.0% $ 345,982 79.1% 5.3%
Reinsurance
Pro rata reinsurance:
Multiline (primarily property)$ 3,194 0.7% $ 5,210 1.2% (38.7)%
Property 11,361 2.4% 8,364 1.9% 35.8%
Liability 19,271 4.2% 9,798 2.3% 96.7%
Marine 6,406 1.4% 9,768 2.2% (34.4)%
Total pro rata reinsurance 40,232 8.7% 33,140 7.6% 21.4%
Excess of loss reinsurance:
Property 47,356 10.3% 49,342 11.3% (4.0)%
Liability 9,326 2.0% 8,794 2.0% 6.1%
Total excess of loss reinsurance 56,682 12.3% 58,136 13.3% (2.5)%
Total reinsurance$ 96,914 21.0% $ 91,276 20.9% 6.2%
Consolidated$ 461,243 100.0% $ 437,258 100.0% 5.5%

Contact: Steve Walsh (Investors) 515-345-2515 Lisa Hamilton (Media) 515-345-7589

Source:EMC Insurance Group Inc.